The Tax Reliefs
There are a number of tax reliefs available for EIS investors paying tax in the UK:
- Income Tax Relief
Reduction in income tax liabilities amounting to 30% of the total investment up to a maximum of £1,000,000 per tax payer per tax year.
- Relief can be applied to the current or previous tax year.
- Relief cannot exceed the amount which reduces an investor’s income tax liability to nil.
- Investors must hold their EIS company shares for at least 3 years to be entitled to this tax relief.
- Capital Gains Tax (CGT) Deferral Facility to defer paying CGT on all, or part, of a chargeable gain by investing the gain into EIS qualifying shares.
- Investors can defer CGT by using EIS up to 12 months before crystallizing gains or up to 36 months afterwards.
- Inheritance Tax Relief (IHT) EIS companies qualify for Business Property Relief (BPR).
- As long as shares have been held for 2 of the last 5 years and are held at time of death and remain BPR qualifying, the value of the EIS investment will count as part of your client’s estate but will have a nil value for IHT purposes.
- Tax-Free Growth
- All growth on investment is capital gains tax free. Income from investment is not.
- Loss Relief
- Relief to provide protection against investments that perform badly. Helping to further reduce risk on investment.